Retirement Planning Benefits Agents and Brokers

Coach retiring agents to sell their book of business to younger agents

(Boonton, NJ, February 16, 2016) —
Chances are your company is filled with graying agents
who plan to retire in the near future. If you hope to
keep some of their business after they step down, you
need to help agents start thinking about succession
planning now, says Chandra Hall, owner of Colorado Mesa
Realty in Colorado Springs.

Hall notes that the median age of Realtors is 57. Most
say they expect to retire in the next 10 years — and
many plan to simply walk away from their business with
no formal exit plan.

The alternative is to create a business the retiring
agent can sell to a younger agent. The typical sale
price for real estate practices is 1.5 times past 12
months’ revenue, Hall says. So if an agent brought in
$200,000 in gross commissions, the sale price would be
$300,000.

Because the buyer of a business is likely to be an
agent who doesn’t have $300,000 lying around for
acquisitions, the seller probably will work out an
arrangement whereby the buyer repays the seller
gradually, from the future revenues created by the
seller’s book of business.

That means that once an agent has gussied up the
business for sale and found a buyer, the seller’s
work isn’t over. To make sure the buyer retains the
seller’s clients, it’s wise for agents to stay on
for a period of months or years to smooth over the
transition.